I A general concern with equity in the economic development process and the focus on issues of poverty, population growth, and environmental degradation in recent years have both created an upsurge in the interest in women's role in economic development. The women in development (WID)issue is closely related to the issue of sex discrimination. In economic terms, discrimination occurs whenever market allocations are affected not by the criterion of productivity, but by non-pecuniary or extraneous factors such as sex. Operationally, the most common forms of discrimination in the labour market are wage discrimination, whereby women are paid lower wages relative to men in all industries and occupations for work that is recognisably equal, (1) and occupational or job discrimination, whereby women are segregated into certain 'female' occupations which are generally low-paying. Both these types of discrimination are fairly common and extensive in Europe and North America, especially in the U. S. In Pakistan, as in some other Third World countries, there is another aspect of discrimination which is even more fundamental than the other two. This refers to the divergence between myth and reality about women's participation in the labour force, which is the most visible indicator of their contribution to economic activity, and hence to development. The reality is that women's labour force participation is high, measured either in terms of the percentage of adult women who work, or the proportion of the labour force that is female, or the hours of work. The myth within Pakistan (especially among the middle class, urbanites, government officials including planners and administrators, and even academicians) as well as outside is that women do not work. The result is that they are left out of the calculations of administrators, planners, decision-makers, and sometimes even academicians. This places them outside the purview of institutions which could have provided essential inputs and services to them and thereby enhanced their productivity. Thus they are in the mainstream of economic activity in reality, but on the periphery in the perception of planners since their work is not fully recognized. This paper looks at discrimination in this perspective. The paper is divided into five sections. Section II explores the myth about women's labour force participation, and the reasons underlying it. Section III analysis the extent of their participation in the rural and urban sectors. Section IV discusses the nature and extent of wage and occupational discrimination. Section V concludes with policy implications.