difference-in-differences with fixed effects
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difference-in-differences with fixed effects
I have two questions related to having fixed effects in the DD model.
I have a treatment that occurs at different times (e.g., 2001,2005, etc.). I want to fit a DD model, so I standardize the treatment years to year "0" as the the treatment time. To control for treatment year heterogeneity, I included the true year fixed effects.
Question 1: Is there anything wrong with this model?
Question 2: Is there an issue to including time-constant fixed effects to this DD model? For example, what if I include i-level fixed effects (
The model is fine but instead of standardizing the treatment years there is an easier way to incorporate different treatment times in difference in differences (DiD) models which would be to regress,
With regards to the second question you can include time-invariant variables at the individual level. You cannot add them at the group level (treatment vs control) because these will be absorbed by the
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