coefficients on earnings are mostly indistinguishable from zero except for the month of May, further suggesting a swift recovery of household business performance.<sup>25</sup> Indeed, this clear reversion to the pre-COVID-19 level speaks to the resilience of the informal businesses in Vietnam.

# **5 Conclusion**

In this paper, we document novel stylized facts about entry and exit of household businesses in Vietnam between January 2018 and August 2020, a period covering the onset of the COVID-19 pandemic. The data include monthly information on a universe of household businesses’ (permanent) closure and (temporary) suspension filings. We find that tax-registered household businesses exhibit rates of entry and exit of about 5-6 percent a year. Our unique data set allows us to also document that an additional 25 percent of household businesses suspend their activity during part of a year. In 2020, the suspension rate spiked to 40 percent of registered household businesses.

We combine this high-frequency statistics of household-business closures and suspension with individual working hours and earnings data from the Vietnamese Labor Force Survey to measure the pandemic impacts on the survival of informal businesses—those accounting for over 30 percent of the labor force. Our two econometric methods, an event-study and a difference-in-differences strategy that employs a sectoral face-to-face intensity index as a proxy for businesses’ lockdown exposure, indicate significant damages to both business activities and earnings as soon as the first COVID-19 cases were reported in the country in February 2020. The greatest damage took place in April and May, following the mandatory national lockdown. Suspension and closure fillings surged by over three times the pre-COVID-19 level in April, and workload and income plummeted by more than a quarter. Across sectors, the greatest impacts were observed in accommodation, restaurant, entertainment, and transportation. Firms with a larger baseline in terms of revenue were more likely to shutdown.

Despite enduring such a dramatic impact on business activities and earnings in April and May, household businesses recovered quickly. We find an immediate rebound across both intensive and extensive margins, with the number of suspensions and closures reduced by over 50 percent as soon as June, and HB work hours and earnings making almost a full recovery by September. Overall, while the dramatic impacts observed almost immediately after the economy-wide lockdown suggest the financial struggle faced by many household businesses in the country, the observed rapid recovery indicates the resilience of this sector during the pandemic.

More broadly, the paper introduces a unique high-frequency dataset of tax registration and filings, which provides comprehensive and novel measures for different household business’ operating decisions, namely entry, exit, and

> 25To check for the robustness of our DiD findings, we estimate the same regressions using an alternative commune-level F2F index set that is constructed using the 2018 sectoral composition of HBs (instead of 2019). The results, presented in Table A.7, are robust and consistent to our main findings in Table 4.

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