Industrial Agglomeration fosters economies of scale and efficiency gains for both firms and labour. Existing literature identifies three key drivers of agglomeration: Labour pooling, knowledge spillover, and input sharing. Labour pooling, crucial for productivity, is measured in two ways: firm-to-industry pooling and the educational background of the workforce. Additionally, factors like knowledge spillover, skill distribution, and various control variables are considered to assess their impact on agglomeration in developing countries. To gauge agglomeration, a location quotient is computed using data from the 2014-15 and 2017-18 Labour Force Survey of Pakistan, covering 21 industries across 14 cities. Due to the absence of longitudinal data, a Pseudo-Panel is constructed, and a fixed-effect econometric technique is applied. The results reveal positive and significant coefficients for firm-to-industry pooling, the percentage of tertiary-educated individuals, low-skilled workers with on-the-job training, and the percentage of low-skilled workers. These findings underscore these factors' role as foundational drivers of industrial agglomeration. In terms of recommendations, policymakers can stimulate economic activity by leveraging large labour markets in underprivileged areas, promoting urban development, and offering cost incentives that align with the benefits derived from agglomeration economies.