<p>Rural depopulation and migration to urban areas pose critical challenges for regional labor markets and balanced development. This study examined the causal effect of attending a local college on the likelihood of working in one’s hometown, addressing a gap in the literature on spatial labor mobility and human capital retention. Using rich individual-level data from Taiwan—including birthplace, college location, current job location, and migration history—we employed an instrumental variable approach to account for the endogeneity of college location choice. Our findings showed that attending a local college significantly increases the probability of hometown employment by approximately 41%. This effect was particularly pronounced in rural areas, where local colleges appear to play a vital role in retaining labor within less urbanized regions. These outcomes are potentially driven by the accumulation of local social capital and stronger community networks fostered through place-based education. This paper contributes to regional science by providing rigorous micro-level evidence linking educational location to spatial labor market outcomes. Our methodological approach and detailed dataset enable a robust identification strategy that complements prior aggregate-level research on regional disparities and migration. The findings offer new insights into the mechanisms behind regional labor retention and highlight the strategic importance of local higher educational institutions in shaping spatial employment patterns. These results are broadly relevant to policymakers seeking sustainable and regionally balanced development in Taiwan and other Asia-Pacific economies facing similar demographic and spatial challenges.</p>