  The log transformation of the dependent variable is not innocuous when using
a difference-in-differences (DD) model. With a dependent variable in logs, the
DD term captures an approximation of the proportional difference in growth
rates across groups. As I show with both simulations and two empirical
examples, if the baseline outcome distributions are sufficiently different
across groups, the DD parameter for a log-specification can be different in
sign to that of a levels-specification. I provide a condition, based on (i) the
aggregate time effect, and (ii) the difference in relative baseline outcome
means, for when the sign-switch will occur.
