business performance, and the Vietnam Labor Force Survey (LFS), which provides data on the intensive margin of household business performance.

Measures to curb the spread of the virus, such as mobility restriction, business closures, and border shutdowns, weighed heavily on businesses in developing economies. Many businesses were forced to close, and many did so permanently due to their inability to sustain prolonged shutdown-related losses.Household businesses, were highly vulnerable to the pandemic-related shocks given their limited resources, and likely suffered disproportionately.

We first estimate the impact of the pandemic on household businesses using an event study approach. Overall, we find substantial reduction across all household business performance indicators, including business suspension, business closure, work hours, and earnings. During April and May 2020—the period immediately following the imposition of a national lockdown, suspension and closure filings surged over three times pre-COVID-19 levels, and weekly work hours and monthly earnings declined by more than a quarter of their pre-pandemic levels. However, household business activity rebounded relatively quickly; both suspensions and closures reduced by over 50 percent in June, while work hours and earnings had made steady recovery by September.

We then show that the impact of the pandemic on household businesses is uneven across industry sectors and firm size. Consistent with our expectation, firms operating in transportation, accommodation, food, and entertainment industries, the sectors most vulnerable to social-distancing orders, witnessed the greatest reduction in business activities. Further, firms with larger revenue—i.e., those with the highest opportunity cost of staying open during lockdowns—were more likely to close permanently.

Further, we find that losses were larger in areas dominated by businesses relying on face-to-face interactions. We follow Avdiu and Nayyar (2020) and construct a commune-level face-to-face (F2F) index to highlight geographical differences across communes in Vietnam. F2F is a continuous measure that captures the average intensity of human-to-human interaction required to conduct business in a commune based on its existing sectoral composition of household businesses. An array of empirical estimates find that household businesses in communes with a higher F2F index suffered higher suspension rates, higher closure rates, lower weekly working hours, and lower monthly incomes.

This paper contributes to the literature in several ways. First, our analysis adds to a literature that studies the performance of informal businesses in developing countries by using high-frequency, tax-registration information covering all tax-registered Vietnamese household businesses. Previous work has relied on information from national household and labor force surveys. See, for example, Maloney (2004); Jayachandran (2020); Banerjee (2013); Banerjee et al. (2015); de Mel et al. (2019); Bruhn and McKenzie (2014); McKenzie and Woodruff (2013); McKenzie and Paffhausen (2019); Li and Rama (2015). Specifically related to the business cycle dynamics of informal firms, McKenzie and Paffhausen (2019) examine the characteristics of, and motivations behind, small firm exit, using a 2