the country in January 2020. Panel B further shows the temporal breakdown of the event-study estimates, for the months between February and September. Three key findings emerge. First, the greatest detrimental effects took place in April and May, the period during and immediately following the national lockdowns.<sup>21</sup> On average, the average business suspensions in a commune surged to 30 firms in April 2020 (over four times the pre-pandemic mean), while the average number of business closures was 1.6 firms (3.2 times the pre-pandemic mean). Further, household business workers reported a 13 hour loss in weekly work hours and 1.9 million VND in monthly earnings in April.<sup>22</sup> Second, even though of lesser magnitude, the significant labor-market impacts of the pandemic were observed as soon as the first cases were reported in the country, i.e., from February onward. This evidence coincides with the gradual increase in February and March in the stringency of government lockdown index (Figure A.3) and the respective mobility reduction reported by the Google Mobility Index (Figure A.4).<sup>23</sup> Finally, despite the sharp decline in business activities and earnings in April and May 2020, household businesses rebounded quickly. Both the average numbers of suspensions and closures reduced by over 50 percent in June 2020 and remained stable in the subsequent months. Similarly, HB work hours had made almost a full recovery by September 2020. Nevertheless, income stayed stagnantly below baseline, with the average monthly earnings of a household business worker 13 percent less than the average predicted level. Overall, while the dramatic impacts observed almost immediately after the economy-wide lockdown suggest the financial fragility of many household businesses,<sup>24</sup> the observed rapid recovery indicates the resilience of this sector. More broadly, the result also speaks to the success of the Vietnamese government’s containment strategy in introducing early and effective domestic and international restrictions to suppress infections. By being able to contain the disease, the country was able to transition quickly to the reopening phase.

# **4.3 Heterogeneities by sector and business revenue size**

We next analyze the impact of the pandemic on household business activities and earnings across sectors and firm sizes. Table 3 shows that household businesses operating in the services industries were the most affected from the pandemic. These results are consistent with sector-specific quarterly output growth in Vietnam in 2020 A.5. The most detrimental impacts are observed in Transportation and Accommodation, Restaurants, and Entertainment (ARE) (panel A). There was an average 164-percent increase in the number of ARE firms filling for suspension, and 108 percent increase in business closure (percentage-change statistics shown in square brackets). The average work

> 21The government imposed a national lockdown on April 1, 2020. The lockdown was lifted after 22 days, on April 22, 2020. There were scattered targeted lockdowns imposed in different parts of the country since April 2020 in response to local outbreaks.

> 22Monthly income (column 2) is reported with a one month lag. For income, the LFS asks respondents for income earned during the last month. Thus, the “May X Post Covid” estimate reflects the income effect of the pandemic in April 2020.

> 23Data on the daily government lockdown stringency index (Figure A.3) was obtained from the Oxford COVID-19 Government Response Tracker (OxCGRT). Data on mobility (Figure A.4) is obtained from the Google’s COVID-19 Community Mobility Reports.

> 24This evidence is consistent with the finding in Bartik et al. (2020) for small businesses in the United States.

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