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  • Should I proceed to diff-in-diff with variables with so many unbalanced observations after matching

    Hi I have been struggling to choose the right covariates for matching and the following (kernel density distribution of propensity score and matching result) is the outcome.
    I was wondering if I could still use these variables for regression such as difference and differences with variables that suffer from imbalance after matching.
    With these variables, diff-in-diff regression may suffer from biased estimates?
    Any tip or suggestion for improving the analysis outcome would be much appreciated.

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    Code:
     pstest der roi ebit hhi_sales lnl lnk ksic2c, both
    
    ----------------------------------------------------------------------------------------
                    Unmatched |       Mean               %reduct |     t-test    |  V(T)/
    Variable          Matched | Treated Control    %bias  |bias| |    t    p>|t| |  V(C)
    --------------------------+----------------------------------+---------------+----------
    der                    U  | 278.12   198.33      5.9         |   1.73  0.084 |  0.27*
                           M  | 251.17   364.17     -8.3   -41.6 |  -0.98  0.328 |  0.08*
                              |                                  |               |
    roi                    U  | .03556   .04006     -4.9         |  -1.69  0.092 |  0.95
                           M  | .03398   .03154      2.7    45.8 |   0.61  0.542 |  1.31*
                              |                                  |               |
    ebit                   U  | 2.6e+11   3.6e+10     37.4         |  19.11  0.000 | 12.88*
                           M  | 1.9e+11   1.8e+11      1.3    96.5 |   0.28  0.779 |  1.23*
                              |                                  |               |
    hhi_sales              U  |  .2943   .24938     21.8         |   7.57  0.000 |  1.05
                           M  | .28274   .27715      2.7    87.6 |   0.54  0.586 |  0.67*
                              |                                  |               |
    lnl                    U  | 7.8331   6.1254    148.0         |  53.98  0.000 |  1.41*
                           M  | 7.3532   7.4134     -5.2    96.5 |  -1.15  0.250 |  0.92
                              |                                  |               |
    lnk                    U  | 26.683   24.625    130.4         |  48.53  0.000 |  1.59*
                           M  | 26.148   26.122      1.7    98.7 |   0.34  0.737 |  0.94
                              |                                  |               |
    sectors                U  | 38.882   30.204     48.1         |  17.06  0.000 |  1.20*
                           M  | 36.116   37.686     -8.7    81.9 |  -1.71  0.088 |  0.68*
                              |                                  |               |
    ----------------------------------------------------------------------------------------
    * if variance ratio outside [0.90; 1.11] for U and [0.88; 1.14] for M
    
    -----------------------------------------------------------------------------------
     Sample    | Ps R2   LR chi2   p>chi2   MeanBias   MedBias      B      R     %Var
    -----------+-----------------------------------------------------------------------
     Unmatched | 0.316   2391.26    0.000     56.7      37.4     160.8*   1.32     71
     Matched   | 0.003      8.68    0.192      4.4       2.7      13.3    0.56     71
    -----------------------------------------------------------------------------------
    * if B>25%, R outside [0.5; 2]
    Attached Files
    Last edited by Chul-Kyoo Jung; 05 Mar 2024, 09:28.
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