Impact Investing and Worker Outcomes
Impact investors claim to distinguish themselves from traditional venture capital firms by pursuing social objectives. Whether they do so in practice is unclear. We use confidential microdata to assess worker outcomes across portfolio companies. Impact investors are more likely than other private equity firms to fund businesses in disadvantaged areas, with minority founders, and with more employee diversity. Post-funding, impact-backed firms more often hire minority, female, less-educated, and lower-earning workers. They also allocate salary increases more favorably to minorities and rank-and-file workers. Our results are consistent with impact investors and their portfolio companies acting according to non-pecuniary social goals rather than impact washing.
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Copy CitationJosh Lerner, Markus Lithell, and Gordon M. Phillips, "Impact Investing and Worker Outcomes," NBER Working Paper 33611 (2025), https://doi.org/10.3386/w33611.Download Citation
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