Abstract: A comprehensive review of the historical process of the continuous improvement in the level of unified management of basic pension insurance for urban employees is conducive to the realization of national unified management in the true sense. The changing process of the level of unified management of basic pension insurance for urban employees is characterized by a combination of induced and mandatory institutional changes, and the trajectory of changes exhibits a progressive, mandatory and stepped pattern. On the basis of summarizing the characteristics of the changes, the paper empirically analyzes the policy diffusion process of the level of unified management of basic pension insurance for urban employees by using the event history analysis method. The findings are as follows. Firstly, the provincial governors from different places have a significant negative effect on the adoption and innovation of the policy of provincial-level collection and payout of urban employees’ basic pension insurance funds, and an explanation has been provided from the perspective of policy attributes. Secondly, intra-regional factors play an inducing role in the process of upgrading the level of unified management of basic pension insurance. The proportion of neighboring provinces adopting the provincial-level collection and payout of basic pension insurance funds and the release of signals by the central government will significantly accelerate the process of implementing the policy. This proves that the process of changes in the level of unified management of basic pension insurance for urban employees is dominated by mandatory institutional change together with induced institutional change. Based on the diffusion mechanism of the policy of provincial-level collection and payout of urban employees’ basic pension insurance funds, it is suggested that the national unified management can promote the implementation of the policy of national-level collection and payout of basic pension insurance funds by taking the internal characteristics of the regions into full consideration and stimulating the internal motivation of local officials.