Extending the analysis outlined in “Measuring Household Labor,” this paper explores the implications of our findings on recall bias for assessing both the extent to which there is a real productivity gap in agriculture, and the possibility of allocating rural labor more efficiently across sectors—for instance, into other (non-agricultural) income-generating activities. We find that the labor productivity in agriculture of recall-surveyed households is 78% lower than that of weekly-surveyed households. Oaxaca decompositions of the mean difference in productivity indicate that the number of hours of farm labor reported by the households explains a large portion of this difference. Given our finding that recall households substantially over-report hours worked while also under-reporting key inputs such as plots, these results suggest that the measures of labor productivity obtained from traditional recall surveys are spuriously (rather than actually) low. Such problems in labor measurement thus distort our view of the true productive capacity of small-holder farms and of the optimal allocation of rural labor.