I'm not sure how one could proceed with induction, so I'll present an alternate proof that uses the methods of calculus. I learned it by solving Problem 90 from Section 11.1 of James Stewart's Calculus: Early Transcendentals (8e), and it definitely qualifies as one of my all-time favorite proofs!
Consider the sequence $a_n=\left(1+\frac{1}{n}\right)^n$. It's clear that $n^2<(n+1)^2$ for every $n\geq 1$, so if we can prove that $a_n$ is strictly increasing, that is
$$\left(1+\frac{1}{n}\right)^n<\left(1+\frac{1}{n+1}\right)^{n+1}$$
for all $n\geq 1$, your inequality immediately follows.
Given some integer $n\geq 1$, consider the function $f(x)=x^{n+1}$ defined over $[0,\infty)$. This function is differentiable over $(0,\infty)$, so given any pair of numbers $a,b\in\mathbb{R}$ with $0\leq a<b$, the mean value theorem implies that there is a $c\in(a,b)$ satisfying
$$\frac{f(b)-f(a)}{b-a}=f'(c)$$
that is,
$$\frac{b^{n+1}-a^{n+1}}{b-a}=(n+1)c^n$$
We know that $n\geq 1$, so $f'$ must be strictly increasing. Thus,
$$\frac{b^{n+1}-a^{n+1}}{b-a}=(n+1)c^n=f'(c)<f'(b)<(n+1)b^n$$
We now rearrange the resulting inequality
\begin{align*}
\frac{b^{n+1}-a^{n+1}}{b-a}<(n+1)b^n &\iff b^{n+1}-a^{n+1}<(b-a)(n+1)b^n\\
&\iff b^{n+1}-(b-a)(n+1)b^n<a^{n+1}\\
&\iff b^{n}\left[b-(nb+b-na-a)\right]<a^{n+1}\\
&\iff b^{n}(b-nb-b+na+a)<a^{n+1}\\
&\iff b^{n}\left[(n+1)a-nb\right]<a^{n+1}\\
\end{align*}
Now we substitute $a=1+\frac{1}{n+1}$ and $b=1+\frac{1}{n}$ This is justified because the inequality holds for $0\leq a<b$ and $0<1+\frac{1}{n+1}<1+\frac{1}{n}$.
$$\left(1+\frac{1}{n}\right)^{n}\left[(n+1)\left(1+\frac{1}{n+1}\right)-n\left(1+\frac{1}{n}\right)\right]<\left(1+\frac{1}{n+1}\right)^{n+1}$$
$$\iff \left(1+\frac{1}{n}\right)^{n}\left[n+1+1-n-1\right]<\left(1+\frac{1}{n+1}\right)^{n+1}$$
$$\iff \left(1+\frac{1}{n}\right)^{n}<\left(1+\frac{1}{n+1}\right)^{n+1}$$
This proves that $a_n$ is strictly increasing, which immediately implies that
$$\left(1+\frac{1}{n^2}\right)^{n^2}<\left(1+\frac{1}{(n+1)^2}\right)^{(n+1)^2}$$
or
$$\left(1+\frac{1}{(n+1)^2}\right)^{(n+1)^2}-\left(1+\frac{1}{n^2}\right)^{n^2}>0$$
$\frac{a}{b}$to express $\frac{a}{b}$, so that mathSE reviewers won't have to guess your intent of $(a + b/c).$ Is it $\frac{a+b}{c}$ or $a + \frac{b}{c}$? Please edit your own question directly, rather than responding with a comment. – user2661923 Apr 20 '21 at 03:59