The study investigates relevant significance of various economic determinants for inflows of worker’s remittances to Pakistan. The study contributes to the current literature by studying the role of policy environment in defining the inflows of workers’ remittances in Pakistan. Following precedence from the policy index developed by Burnside and Dollar (2000), we develop a policy index for Pakistan and use it as a proxy for estimating the relationship of this policy index with the remittances in Pakistan. For having efficient and precise coefficient estimates of our estimated models, the study has also taken other conventional macroeconomic determinants into account such as GDP, exchange rate, labor force participation and interest rate spread. The study finds that during the period (1972-2011) policy environment is one of the significant determinants of worker’s remittances in Pakistan. Test of super exogeneity found that the estimated dynamic error correction model including economic policy in Pakistan is super exogenous against relevant class of interventions or external shocks which leads us to conclude that the estimated dynamic Error Correction Model in this study can be used for making future policy choices in Pakistan. The application of several post estimation tests proves that our empirical model is robust and the coefficient estimates are BLUE Supervisor:- Dr. Abdul Qayyum