# Difference in Differences: id switches between treatment and control group

In my difference in differences model firms $> x$ belong to the treatment group whereas firms$< x$ act as control.

I have a two period model:

• In $t_1$ firm $i$ is $> x$ and thus belongs to the treatment group
• In $t_2$ the same firm $i$ is $< x$ and belongs to the control group

Do you have any recommendations how to deal with this problem?

The treatment is a change in a law that only affects firms with more than $x$ employees. Firms smaller than $x$ are not affected by this law. However, a firm that is $<x$ in $t_1$ can certainly exceed the threshold in $t_2$. In this case it will be affected by the law change in $t_2$
At first blush, this sounds more like two regression discontinuity designs to me, one for each period. It would be nice to get the same answer in both periods. On the other hand, since $x$ is chosen by the firms, RD would not be estimating the effect of the law if firms lay off workers to avoid compliance. –  Dimitriy V. Masterov Sep 10 '12 at 17:11