It has been argued that a monopsonist would like to hire more workers at the equilibrium wage that he or she offers. The labor market equilibrium in monopsony is therefore characterized by “reported vacancies.” This property is claimed to be perfectly consistent with the persistent shortage of registered nurses. By using the famous Solow (1979) efficiency wage monopsony model and a job-hour monopsony model, this paper examines the validity of this argument. It is shown that a monopsonist may not report vacancies since the labor market equilibrium in monopsony may be in a state of excess labor supply. As a consequence, the theoretical explanation of the shortage of registered nurses must be found beyond the simple textbook monopsony model.
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