ABSTRACT
This chapter outlines the main rural labour market that for farm labour. The well-recognized 'farm income problem' is explained in terms of this general economic model. This explanation gives an indication of the likely success of policy alternatives available to deal with the problem. Farm policies are not, however, merely a matter of resource allocation; they are also designed explicitly to influence the distribution of income. The success of farm policies, judged by this criterion, is most doubtful and there have been attempts to offset the maldistribution effects of earlier farm policies through structural policies. Classical labour market theory seeks to explain the allocation of labour as a resource and the market-determined distribution of factor income which results. The present interest of the theory is that it can explain part of the transfer of labour resources from the agricultural sector which has occurred during the past century.
