st: how to test DD assumption about the similar trend before treatment

["Li, Rui (CDC/ONDIEH/NCCDPHP)" <eok8@cdc.gov>]

Hi,

I am brand new to the group. I did check the FAQs. However If I ask questions being answered before, please forgive me.

I am using a DD model and testing whether the treatment group and control group have similar trend before the policy changed (repeated cross-sectional data). I have at least 5 years of pre-policy data. I tested by the following two ways:

1. Add a year trend and interaction between year and treatment group, then if the interaction terms was not significant, I concluded that the two groups had similar trend before the policy change (like a linear spline analysis with the year before policy change as the knot).
2. Run separate regressions for treatment group and control group using only pre-policy data, I coded the year variables as categorically data because the time trend might not be linear. Then I compared each coefficient for the year variables in the two regression analysis using ttest. 

Are these the right ways to test the assumption?

Thanks!

Rui



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