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Difference-in-differences analysis with a control group that differsconsiderably from a treated group is vulnerable to bias from historical eventsthat have different effects on the groups. Constructing a more closely matchedcontrol group by matching a subset of the overall control group to the treatedgroup may result in less bias. We study this phenomenon in simulation studies.We study the effect of mountaintop removal mining (MRM) on mortality using adifference-in-differences analysis that makes use of the increase in MRMfollowing the 1990 Clean Air Act Amendments. For a difference-in-differencesanalysis of the effect of MRM on mortality, we constructed a more closelymatched control group and found a 95\% confidence interval that containssubstantial adverse effects along with no effect and small beneficial effects.

Constructing a More Closely Matched Control Group in a Difference-in-Differences Analysis: Its Effect on History Interacting with Group Bias