Increased labor absorption in agriculture has been widely held to be the key to solving unemployment problems in developing Asia, following the historical experience of East Asian countries. The new seed-fertilizer technology, interacting with expansion of irrigation and cropping intensity, initially increased labor absorption in wheat and rice production. However, evidence from recent village studies indicates that new labor-saving chemical and mechanical innovations originating in the developed countries are being rapidly adopted by farmers of the developing countries owing to their private cost-reducing characteristics. This international transfer of technology contributes to increased productivity, but results in net reductions of agricultural labor use. Recognition of the declining capacity of the agricultural sector for labor absorption indicates the need to seek solutions to unemployment problems in the off-farm sector.