The three essays of this dissertation discuss the substantial phenomenon of formal and informal employment in Pakistan. The first essay elaborates on the participation determinants of workers in the formal and informal sectors of the labor market. The motivational factors of workers in selecting a sector are observed at the individual and household level. A theoretical model that presents worker behavior in sector participation is followed. An aggregate time-series dataset is used for the period 1984–2015. The autoregressive distributed lag (ARDL) model is applied for estimating the analysis. The results propose that workers with a high level of motivational factors will enter the formal sector, while workers possessing low levels of motivational factors will engage in the informal sector. In the case of households, the results suggest that spouses with low motivational factors will work in the informal sector when the head of the household works in the formal sector. The concluding remark is that motivational factors play a role in sector selection for workers in the labor market of Pakistan. Policies are recommended to resolve these factors that force workers to contribute to the informal sector. The second essay scrutinizes the influence of core labor standards on informal and formal employment levels in the Pakistani economy. A core labor standards index for Pakistan is constructed using principal component analysis (PCA) to check the strength of labor standards enforcement in the economy. The time period for the aggregate time-series dataset is taken from 1982–2017. The ARDL co-integration model is used to estimate the long-run relationship between core labor standards and both types of employment. The results show that the relationship between core labor standards and informal employment is negative, which illustrates the reduction in informal employment under the effective enforcement of labor standards. Formal employment presents a positive relationship with core labor standards, which elaborates the existence of labor standards in the formal sector. The conclusion of this analysis is that the effective enforcement of core labor standards supports the economy in moving from informality to formality. The recommended policies help to enhance the strength and implementation of labor standards in the economy. The third essay elaborates on the influence of core labor standards on the economic growth of Pakistan in the presence of informal sector employment. For this purpose, the human capital augmented Solow growth model proposed by Mankiw et al. (1992) is extended by adding core labor standards and informal employment. An aggregate time-series dataset is used for the time period 1999–2017. To resolve the endogeneity problem, the non-linear two stage least square instrumental variable (NLTSLS-IV) approach is applied to estimate the growth model. The estimated outcome shows a positive relationship between core labor standards and economic growth. The relationship between the growth rate of both formal and informal employment is positive with economic growth. The conclusion is that the enforcement of core labor standards increases economic productivity by protecting worker rights and will ultimately enhance economic growth. Policymakers should consider the phenomenon of labor standards enforcement in economic growth policies. Supervisor:- Dr. Hafsa Hina Co-Supervisor:- Dr. Karim Khan