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This study examines “growth mindset climate” an aspect of a school’s climate that may compensate for socioeconomic inequalities. Growth mindset is the belief that ability is malleable. A growth mindset climate is fostered when there is a shared perception that teachers believe their students’ academic ability can be improved. We applied multilevel modeling to a nationally representative sample of 271,545 grade 8 students nested within 8,679 schools taken from Indonesia’s national assessment database. We found that growth mindset climate (1) positively predicts reading literacy, over and above socioeconomic background; (2) partially mediates and (3) positively moderates the relations between socioeconomic background and literacy. These findings indicate that teaching can both reinforce and compensate for social inequalities.