Many will not even consider college because they would be unable to support themselves if they moved to the city, says the study by the Institute for Public Policy Research's northern office.
New 14-19 vocational diplomas are unlikely to be offered at every further education college in rural areas, despite the fact that teenagers will have a statutory entitlement to study for them from 2008, the report says.
Sue Stirling, director of IPPR in the north, said: "Teenagers in rural areas are facing a dilemma.
"Having got their GCSE results, most teenagers think about re-sits or further study at a local FE college.
"But for many teenagers in rural areas that is not an option unless they can stay in the city for residential courses."
IPPR recommends continued improvements to post-16 education and training opportunities, increased residential support offered at FE colleges for specialist vocational options and more partnerships between colleges to make sure courses are locally available.
The institute also said that immediate action is needed to increase the levels of information, advice and guidance provided for all teenagers - particularly those in employment - which could help them move on from low-wage, low-skilled work by re-engaging with education and training.
The report, Should I stay or should I go? Rural youth transitions, is by Jane Midgley of IPPR North and Ruth Bradshaw of the Commission for Rural Communities