The main objective of this paper is to analyze the agricultural labor market in Central and Eastern European Countries (CEECs). In CEECs dual structure of farms exists. There are large corporate farms (CF) and small family farms (FF). In CEECs the crucial choice is not between farm organization, but rather what production structure is chosen by each farm. Both CF and FF usually specialize in commodities in which they have comparative advantage. Comparative advantage of FF relative to CF stems from the existence of transaction costs and from two problems causing them: adverse selection and moral hazard. These are related to recruiting, monitoring, and supervising workers, and occur among farms using hired labor. Farms using only own labor usually do not suffer from moral hazard problem. That is why CF specialize in products with low labor monitoring and FF specialize in products with higher labor monitoring requirements. A key focus of this paper is the determination of farm size, demand for labor, and production structure in CEECs.