st: complex difference-in-difference approach with e.g. economic sectors

[Pascal Sulser <pascal.sulser@access.uzh.ch>]

Hi,

Does anyone know the correct specification for a difference-in- 
difference (DID) approach with e.g. economic sectors included. In a  
standard regression (no DID) I use e.g.

"reg unemployment_rate age age2 sector1 sector2"  --> assuming the  
base group is working in the tertiary sector


Now, if I want to do a difference-in-difference approach to see  
weather there exists a significant difference between male workers and  
female worker, which of the two variants is the correct to chose,  
assuming there are differences between all independent variables?


1. reg unemployment_rate female age age_female age2 age2_female  
sector1 sector1_female sector2 sector2_female

OR

2. reg unemployment_rate female age age_female age2 age2_female  
sector1 sector1_female sector2 sector2_female sector3_female


I am not quite sure whether regression 1. is the right one assuming  
that if female==1 then this means she is a women working in the  
tertiary sector or whether I have to add that interaction term, too.


Thank you very much for your help, already!


Pascal

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