The transition into the workforce is a major developmental milestone in young adulthood that brings tremendous life changes and sets the course for future development. This project aims to examine the impact of the work transition on self-esteem, a key personality characteristic responsive to experiences of success and failure. Self-esteem is among the strongest predictors of major life outcomes, including mental and physical health, economic prospects and longevity. Long considered to be highly stable across the lifespan, new evidence shows that self-esteem can change in response to life events. Yet, knowledge about the processes that elicit change is scarce as research relies on few assessments and theories mute on mechanisms. The central aim of this project is to advance the understanding of the mechanisms underlying self-esteem change by closely dissecting the macro- and micro-level processes. I have developed a framework that integrates different theoretical approaches to understand self-esteem processes. It has three aims: (1) To study the macro-level contextual changes, (2) To examine the micro-level processes of thoughts, feelings, and behavior evoked through the individuals’ daily interaction with the environment and (3) to examine how the resulting changes in state self-esteem (short-term changes) get manifested in trait self-esteem (long-term changes). A comprehensive multi-method approach will be used that combines high-density in-situ assessments of daily life using a novel smartphone technology and physiological assessments (to illuminate the short-term processes) with multi-wave self- and observer-reports over a longer time scale (to examine developmental change). This ambitious, innovative project will provide novel insights into the mechanisms of self-esteem development in a major life transition. It will have a strong impact on the field and has the potential to inform policy allowing for tailoring interventions to promote successful development.