The text describes the lives and welfare of the Chicanos as affected by development in rural economy; particularly in the Southwest, where they have their highest population concentration. The study does not seek to perpetuate the myth that Chicanos as a group are tied intrinsically to rural sections; most are not. Nonetheless, many still are, and will be for some time. It does investigate their high rate of rural poverty, which has assumed a character that is distinctly different from the plight of other groups and regions. This policy paper is an outgrowth of a Center for the Study of Human Resources project (University of Texas at Austin). Contents include (1) general background; (2) special considerations; (3) rural labor market of the Southwest; (4) labor supply and public policy; (5) effect of general agricultural employment policies; (6) influence of manpower policy and (7) concluding observations. The report observed that there was an obvious need for retraining, welfare reform, and income maintenance programs. (FF)