Traditional Culture Encyclopedia - Traditional culture - Do the time selections before and after the did policy have to be consistent?

Do the time selections before and after the did policy have to be consistent?

unnecessary.

DID requires that in the absence of policy, the experimental group and the control group have the same time trend in the outcome variables under the assumption of a linear model, which is commonly known as the parallel trend assumption.

Because the counterfactual state cannot be observed, the hypothesis cannot be confirmed by statistical testing.

The usual approach is to test whether the trends in the outcome variables of the experimental group and the control group are parallel before the policy occurs. If they are parallel, it is considered that in the period after the policy occurs, if there is no policy impact, they are still parallel, that is, DID identification is satisfied.

Assumption.

Otherwise, it is considered unsatisfactory.

This can be seen as a falsification test.

A similar test should be done for the example in the question.