Econometrics: Controls and Difference-in-Differences

  • #1
Sorry for the double post with the SS section -- I thought this was probably a better place to ask this question.

Hello all,
I'm working on an econometrics project in which I'm using difference-in-differences approach to estimate the effects of the 1996 TANF welfare reform in the US. My main dependent variable is ln(total household income). My treated group is single women with children and my control group is single women without children.

My question is, when is it appropriate to add controls in a difference-in-differences regression framework? Is it only when one believes that the value of the control variables differs systematically (i.e. with time) between the treatment and control groups and also affects the dep. var.?

A related question: I want to control for education and want to use an instrumental variable for education. Any good ideas of IVs in the Current Population Survey (must use this dataset)?

Thanks very much!
 

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