# Data Setup for Differences-in-Differences

Which setup is correct for a difference in difference regression model using

$Y_{ist} = \alpha +\gamma_s*T + \lambda d_t + \delta*(T*d_t)+ \epsilon_{ist}$

where T is a dummy which is equal to 1 if the observation is from the treatment group and d is a dummy which is equal to 1 in the time period after the treatment occurred

1) Random samples from each group and time (i.e. 4 random samples)

or

2) Panel data where the same units are tracked over both time periods?

Does it matter and if not, can OLS be used with either case?

• I haven't seen (1) done - the analysis always seems = (2). Not sure why you would do (1). But I haven't seen many DID studies. – charles Dec 21 '13 at 4:28
• Examples of 1 are shown in Wooldridge Introductory Econometrics section 13.2 – B_Miner Dec 21 '13 at 14:18