This paper provides a theoretical framework to analyse land quality and labour allocation decisions by poor rural households in the context of increased population densities in slash-and-burn (shifting cultivation) agro-ecosystems. A bio-economic optimal control model is presented and its results calibrated with data from two farming communities from Yucatan (Mexico). The ecological-economic model restates the validity of the neo-Malthusian 'Population Pressure Hypothesis' (PPH) as a major factor of land degradation. It is pointed out that 'fallow crises' may be overcome when the production elasticity of total farm labour is sufficiently high compared to the elasticity of substituion between farm labour and soil quality. Calibration of the model also suggests that the strategy by poor households is to allocate more labour to clearing forestland when population densities increase, hence adding to 'population pressure' on the forest commons.