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From |
Nils Braakmann <nilsbraakmann@googlemail.com> |

To |
statalist@hsphsun2.harvard.edu |

Subject |
Re: st: DiD estimation versus fixed effects when T>2 |

Date |
Thu, 5 Mar 2009 09:57:50 +0100 |

Dear Alison, in your scenario you have several possibilities. Some remarks: (1) Your treatment group dummy is (typically) fixed over time which implies that it is indistinguishable from the unit fixed effect. If your treatment group dummy varies within units (individuals/countries etc.) over time, you might be in trouble as units may then select into or out of treatment. (2) You need interactions between the treatment group dummy and the period dummy/dummies (see point 3). The coefficient gives the divergence in trends in treatment and control group in the post treatment period. Given that the assumption holds that both groups would have experienced the same trend in the counterfactual situation without treatment this coefficient is the treatment effect. (3) There are two possibilities to set up the pre-/post-Treatment dummies: (3.a) Define a single dummy that is "1" in all periods after treatment and "0" before. You may also add additional time controls. The treatment effect is then a time-weighted average of the effects in the post-treatment years. (3.b) Use year dummies and interactions between the treatment group and each year. Say 2003 is the first year of treatment. The treatment-group-year interactions for 2003, 2004... tell you how the treatment effect evolves over time. Note, however, that the longer time series make it somewhat more unlikely that the common-trend assumption holds. (3.c) If the treatment occurs in different years for different units, you need to modify (3.b). I am not exactly sure what you mean by "four different treatment variables". I suspect you could use these to construct higher order DiD-estimations (triple differences etc.) , but this is hard to tell without knowing your exact situation. I am also not exactly sure what your variable "treatment" is (in point (1) I suspected that this is the treatment group dummy, but I'm not so sure now). Is this a treatment group dummy or some sort of implicitly defined interaction term (e..g. is this variable "1" only after a treatment occurred or is it fixed over time)? Hope this helps, Nils On Wed, Mar 4, 2009 at 4:00 PM, Riggieri, Alison C <ariggieri@gatech.edu> wrote: > I am attempting to take panel data (5 years, for all 50 states +DC) and determine a DiD estimation. I have four different treatment variables, all dummy variables. > > My question is this: my adviser told me to to run "xtreg y x treatment 2002 2003 2004 2005, fe" to get a DiD estimation, but I'm not sure that is correct. He told me to just add dummy variables to the fixed effects regression. > > Does that compute the DiD estimation or do I have to interact the treatment and the year? > > thanks in advance, > > Alison > > -- > PhD Student > School of Public Policy > Georgia Institute of Technology > Atlanta, GA > 508-410-1931 > * > * For searches and help try: > * http://www.stata.com/help.cgi?search > * http://www.stata.com/support/statalist/faq > * http://www.ats.ucla.edu/stat/stata/ > * * For searches and help try: * http://www.stata.com/help.cgi?search * http://www.stata.com/support/statalist/faq * http://www.ats.ucla.edu/stat/stata/

**References**:**st: DiD estimation versus fixed effects when T>2***From:*"Riggieri, Alison C" <ariggieri@gatech.edu>

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