This paper assesses the recent changes in rural employment in the OECD countries, highlighting the growing role of employment in services and, in some cases, manufacturing activity. In many, but not all, rural areas the secular decline in agricultural employment has been more than counterbalanced by growing employment in these other sectors. However, the diversity of employment growth within and between rural areas is stressed, as are the implications of this diversity for policy. A range of explanations for the relative economic success of some rural areas is explored. These include the impacts of globalisation; restructuring of the labour market; new 'consumption' demands on the rural areas; and human mobility. The paper concludes that traditional theories do not explain the diversity of outcomes in rural areas. New approaches are needed. Recent analyses under the banner of 'the new economic geography' has advanced our understanding of the pre-conditions for rural development to occur, but understanding the diverse pattern of rural employment outcomes within the same kind of geography remains a challenge which needs to be addressed by inter-disciplinary approaches and methods. © 2000 Elsevier Science B.V. All rights reserved.