Is it necessary to show the parallel trends in the outcome between treatment groups and control groups while using the Difference in difference method?
The key assumption for any DD strategy is that the outcome in
treatment and control group would follow the same time trend in the
absence of the treatment. This does not mean that they have to have the same mean of the
outcome
In some cases, treatment and potential control groups do not follow
parallel trends. In such case Standard DD method would lead to biased estimates.
Abadie & Gardeazabal (2003) pioneered a synthetic control method.The basic idea behind synthetic controls is that a combination of
units often provides a better comparison for the unit exposed to the
intervention than any single unit alone.
Dear my friend,
It depends on your research case. You should check the variables' trends and then make a decision.
Good luck!
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