The recommendation is one of a series made by the City Growth Commission on how universities can play a bigger role in improving the economies of urban areas.
The commission says funding should be given to universities to encourage them to carry out research that helps grow the local economy.
It also calls for measures to encourage more graduates to stay in their university town such as a “graduate clearing system” matching university leavers with job vacancies and financial incentives for students who find a job locally.
Today’s report is the latest from the City Growth Commission, set up by the RSA think tank to examine what UK cities need to thrive.
Respected economist Jim O’Neill, who chairs the Commission, said: “Relatively low numbers of graduates stay in the cities where they graduate, with many either disappearing back overseas or down to London to employ the fruits of their enhanced minds elsewhere.
“Surely it would be sensible to consider pursuing a number of initiatives to either help or encourage graduates to stay in the metro areas where they graduate, as a key ingredient to helping these cities prosper?
“We feel it would certainly help to deliver on the Commission’s goal of trying to recommend interventions that raise the economic activity of all metro areas, thereby boosting the long term growth potential of the UK.”
The report suggests the biggest cities should be able to offer “graduate entrepreneur visas” to overseas students to encourage them to stay in the UK to start businesses.
It also recommends university courses should include “sandwich years” by default giving students the opportunity to experience the world of work.