In Pakistan intersectoral wage trends have been analysed byGuisinger and Hicks (1978); Irfan (1982) and Irfan and Ahmed (1985). Thestudies show that over the period 1970 to 1984 real wages of thelarge-scale manufacturing, construction and agriculture sectorsincreased while that of the government employees declined significantly.The study shows international migration to be one of the majordeterminants of the rise in real wages, in addition to important policyinterventions. The present study is an extension of Irfan and Ahmed’swork. It has been undertaken for two reasons. First there is greatscarcity of empirical evidence on this very important issue. Second, themore important factor is the sharp reversal in one of the majorvariables – out migration. Since 1981 there has been net returnmigration. This phenomenon a priori is expected to upset the labourmarket and the wage rates in the opposite direction. The study isplanned as follows: Section II describes the trends in real wagesbetween the formal and informal sectors.! Section III describes thefactors behind the observed trends in real wages, and finally Section IVgives the conclusions of the study.