The Impact of Economic Shocks on Quality of Life and Social Capital in Small Towns*

Abstract

Abstract Economic shocks are sudden events causing a significant impact on the local economy. Disaster community literature predicts that community outcomes from shocks will depend on the kind of shock. Consensus crisis shocks will be followed by increases in social capital and quality of life. Corrosive community shocks will result in declines in these factors. Using longitudinal data from small towns, we find that shocks are not associated with declines in quality of life or social capital, however, certain kinds of shocks are followed by increases. The strength of shocks and the net cumulative effects of multiple shocks are related to social capital and quality of life. This analysis advances conceptualizations by unpacking shock events and suggesting that strength and effect of multiple shocks are as important as shock type.