COMMUNICATIONS AN EMPIRICAL TEST OF A REGIONAL PHILLIPS CURVE AND WAGE RATE TRANSMISSION MECHANISM IN AN URBAN HIERARCHY: COMMENT Richard J. Cebula In a recent issue of the Annals, Reed and Hutchinson (hereafter R-H) attempt to and 9 test the significance of a wage-unemployment trade-off at the metropolitan level, and to determine the significance of a downward wage transmission effect through the tiers of an urban hierarchy [2, p. 19]. R-H are concerned with two basic models: -i Wit = f(Uit ' uit' Pit' W*t )' i = 1 (I) wit = 5it, ;'it' w t)' i > 1 (2) where Wit = percentage change in local wages in tier i during period t U~ 1 = inverse of the unemployment rate in tier i during period t Uit = percentage change in the local unemployment rate in tier i during period t Pit = percentage change in the local price level in tier i during period t W't= wage transmission variable for tier i during period t The introduction of the wage rate transmission variable is quite insightful and potentially very useful 9 Moreover, it reveals an awareness by R-H of the notion of "interdependency" in wage rate determination. Unfortunately, although R-H seem to be somewhat sensitive to the idea of a simultaneity problem, this Comment argues that their model, because of the way in which it is specified and estimated, unequivocally suffers from a simultaneity bias and hence yields biased and inconsistent estimators; thus, it is argued that the R-H model re- quires re-evaluation by more appropriate techniques. Before proceeding to demonstrate this point, we note that R-H argue 97