Dear Statalist,

I'm running a fixed effects diff. in diff. I have data on 1,000 firms for 3 years with the treatment being carried out in period 3. I coded treatgroup as a dummy with 1 for treated and 0 for untreated; years contains 2013 2014 and 2015 and in my understanding, it can be used with i. the covariates are continuous.

My objective is to estimate: (PRODUCTIVITY)t= (TREATMENT)t + YEARS + Fixed Effects + Covariates+ Error

if I use just two periods (1 pre treatment and 1 with treatment) I get:

Code:
xtreg prod treatgroup##i.year capital_per_worker graduates if year==2014 | year==2015, fe
note: 1.treatgroup omitted because of collinearity

Fixed-effects (within) regression               Number of obs     =      2,000
Group variable: id                              Number of groups  =      1,000

R-sq:                                           Obs per group:
     within  = 0.8176                                         min =          2
     between = 0.9982                                         avg =        2.0
     overall = 0.9978                                         max =          2

                                                F(4,996)          =    1116.00
corr(u_i, Xb)  = -0.8917                        Prob > F          =     0.0000

------------------------------------------------------------------------------------
      productivity |      Coef.   Std. Err.      t    P>|t|     [95% Conf. Interval]
-------------------+----------------------------------------------------------------
      1.treatgroup |          0  (omitted)
                   |
              year |
             2015  |   14.14306   1.172699    12.06   0.000     11.84181     16.4443
                   |
   treatgroup#year |
           1 2015  |   3.527095   1.093077     3.23   0.001     1.382097    5.672094
                   |
capital_per_worker |   .3243046   .0151881    21.35   0.000     .2945002     .354109
         graduates |  -.0108163   .1042296    -0.10   0.917     -.215351    .1937185
             _cons |  -3.904104   40.72751    -0.10   0.924    -83.82568    76.01747
-------------------+----------------------------------------------------------------
           sigma_u |  39.766188
           sigma_e |  11.913944
               rho |  .91763318   (fraction of variance due to u_i)
------------------------------------------------------------------------------------
F test that all u_i=0: F(999, 996) = 4.51                    Prob > F = 0.0000
However, if I add the second pretreatment period I get:

Code:
 xtreg prod treatg##i.year capital_per_worker graduates, fe
note: 1.treatgroup omitted because of collinearity

Fixed-effects (within) regression               Number of obs     =      3,000
Group variable: id                              Number of groups  =      1,000

R-sq:                                           Obs per group:
     within  = 0.8501                                         min =          3
     between = 0.9975                                         avg =        3.0
     overall = 0.9968                                         max =          3

                                                F(6,1994)         =    1884.53
corr(u_i, Xb)  = -0.7926                        Prob > F          =     0.0000

------------------------------------------------------------------------------------
      productivity |      Coef.   Std. Err.      t    P>|t|     [95% Conf. Interval]
-------------------+----------------------------------------------------------------
      1.treatgroup |          0  (omitted)
                   |
              year |
             2014  |   14.99192   1.075324    13.94   0.000     12.88305     17.1008
             2015  |   29.38521   1.361145    21.59   0.000     26.71579    32.05463
                   |
   treatgroup#year |
           1 2014  |   -8.37968   1.236145    -6.78   0.000    -10.80395   -5.955409
           1 2015  |  -4.838001   1.236083    -3.91   0.000     -7.26215   -2.413851
                   |
capital_per_worker |    .318596   .0091791    34.71   0.000     .3005944    .3365976
         graduates |   .0944828   .0723829     1.31   0.192    -.0474712    .2364368
             _cons |  -2.767459   24.26562    -0.11   0.909    -50.35608    44.82116
-------------------+----------------------------------------------------------------
           sigma_u |  34.553212
           sigma_e |  13.461979
               rho |   .8682144   (fraction of variance due to u_i)
------------------------------------------------------------------------------------
F test that all u_i=0: F(999, 1994) = 7.01                   Prob > F = 0.0000
Have I coded it right?
Why the two variables are negative for TREATMENTxYEARS?
Can I conclude something about the common trends assumption?

Thank you for your time, I'm sorry if the question is basic but I'm new to Stata.