Impact Investing and Worker Outcomes

This paper investigates how impact investing—where private capital pursues social goals alongside profits—affects worker outcomes. Using extensive U.S. Census data, it finds that firms backed by impact investors are more likely to operate in disadvantaged areas, hire minority and less-educated workers, and provide relatively better wage growth for these groups than traditional venture capital firms. While overall financial performance lags behind VC-funded companies, impact-backed firms show clear alignment with social objectives, especially in equitable hiring and compensation. These findings suggest that impact investing often delivers more than just cosmetic change.