Pinocchio Learns to Love — Jan L. Coates

The Caramel Tree Readers Level 2 is a delicious series of leveled readers for children ages 5 to 7. It offers a range of classic fairy tale adaptations with 500 to 700 words, Lexile measures of 200L to 500L, and the detailed illustrations provide picture clues to help with fledgling independent reading.
 
Pinocchio goes to school with real children, and he is teased. Pinocchio then lies about his father's job to impress the children, but he soon realizes that his father is a great man regardless of his job.