Problem
Consider the DiD estimator to identify the causal effect of the introduction of the EITC on mothers' labour supply. First, show how one can implement the DiD using raw means when there are no covariates. Second, show how you can equivalently use a regression model to estimate the DiD. Be sure to discuss which coefficient (or combination of coefficients) in the regression model corresponds to the DiD estimate of causal impact. Note that we are considering the "reduced-form" effect of the EITC's introduction-the percentage point change in mothers' employment due to the EITC-rather than estimating elasticities. What are the advantages of using a regression model to estimate the DiD?