1550s, from scare (v.) + crow (n.). Earliest reference is to a person employed to scare birds. Meaning "figure of straw and old clothes made to resemble a person and set in a grain field or garden" to frighten crows and other birds from the crop is implied by 1580s; hence "gaunt, ridiculous person" (1590s). For the formation, compare daredevil.
An older name for such a thing was shewel. Shoy-hoy apparently is another old word for a straw-stuffed scarecrow (Cobbett began using it as a political insult in 1819 and others picked it up; OED defines it as "one who scares away birds from a sown field," and says it is imitative of their cry). Also fray-boggard (1530s). Middle English had skerel, apparently in the same sense, from skerren "scare."