A trend since the fall of Communism is the growth in selectivity and competition.
This has led to the development of elite, better-funded, upper secondary schools, as well as private schools in the former Soviet bloc.
The report says: "This may help more able children and those from better-off families. But it does little for others and may take resources away from them."
In Russia some secondaries have special arrangements with universities which give their pupils preferential access in return for guaranteeing a source of good students. Sometimes the universities send lecturers into the schools to teach lessons.
John Micklewright, who led research for the report, says: "Growing inequality is difficult to measure. But the evidence building up is convincing even in the countries that are doing quite well, like Hungary. Maths and science tests in 1990 and 1995 showed achievement rising in Budapest and big country towns but falling in the villages."
As schools visibly crumble richer families in the large cities will find a way to send their children to an elite state school or go private. But poor children in a rural town, where the only school has a leaking roof and finds it hard to attract teachers, will not be so fortunate, the report says.