There are reports of current nurse shortages in all but a few OECD countries. With further increases in demand for nurses expected and nurse workforce ageing predicted to reduce the supply of nurses, shortages are likely to persist or even increase in the future, unless action is taken to increase flows into and reduce flows out of the workforce or to raise the productivity of nurses. This paper analyses shortages of nurses in OECD countries. It defines and describes evidence on current nurse shortages, and analyses international variability in nurse employment. Additionally, a number of demand and supply factors that are likely to influence the existence and extent of any future nurse shortages are examined. In order to resolve nurse shortages, the paper compares and evaluates policy levers that decision makers can use to increase flows of nurses into the workforce, reduce flows out of the workforce, and improve nurse retention rates. Although delayed market response may have been responsible for recurring cycles of shortages and surpluses of nurses in the past, current and future nurse shortages in OECD countries appear to be driven by a broader set of economic, demographic and sociological factors. In addition to delayed market response, current nurse shortages seem to be caused by fewer young people entering the workforce, a greater range of professional opportunities open to young people, the low social value given to nursing, negative perceptions of nurse working conditions and an ageing nurse workforce. Furthermore, demand for nurses has continued to increase due to ageing populations, increased consumer activism and rapid evolution of medical technologies. To date, little is known about the cost-effectiveness of different policies to ensure an adequate supply of nurses. Both pay and conditions of service seem to influence flows of nurses into and out of the workforce, and nurse retention. Pay has been shown to influence entry into nursing school, participation of qualified nurses in the workforce, nurse retention, and exits from the workforce, although more work is needed to quantify the impacts of pay on these stocks and flows. Improvement in conditions of service, such as: offering flexible work and retirement arrangements; setting up family care initiatives; improving workforce management policies; creating a supportive organizational culture; enhancing career advancement prospects; also seem to have had some success in retaining nurses. Additionally, staffing levels seem to play a role in recruitment and retention, with evidence emerging that minimum nurse-to-patient ratios are associated with reduced nurse turnover and increased nursing school intake. There is also some research indicating that nurse shortages may be reduced by raising the proportion of nurses who are registered, without employing more overall. Although there are signs that nurse shortages are set to worsen in the near future if policy action is not taken, this is not an inevitable outcome. Traditional policy responses that focus on one specific aspect of flows in or out of the workforce or retention, however, are unlikely to suffice. Instead, this paper points to the introduction of mixed policies that initiate innovative approaches to nurse education and training, offer strong incentives to recruit domestic and foreign nurses, raise productivity and make pay and conditions of service attractive enough to retain nurses of all ages. (Contains 12 footnotes, 9 figures and 8 boxes.)