We use both census and survey data to show that a large school building program from Indonesia causes improvements in inter-ethnic and inter-religious relationships. Our generalized difference-in-differences estimates suggest that receiving more education causes an increase in interethnic and interreligious tolerance as measured by survey questions. In addition, we use Indonesian census data to show that the schooling program caused an improvement in a behavioral measure of inter-ethnic relationships: we find an increase in inter-ethnic marriages by about 14 percent as a result of the program. We demonstrate robustness of results and show that the common trend assumption is satisfied. Subsequently, we shed light on several mechanisms: first, treated individuals are more likely to migrate, to live in cities and to work in occupations outside of agriculture. This in turn, increases their incomes and the religious and ethnic diversity of their social environments. Second, we employ an additional identification strategy to show that the educational content under Suharto emphasizing the national unity of Indonesia is an important mechanism underlying the estimated treatment effects.