Unemployment is one of economic-social problems. Good governance effect on unemployment (direct and indirect) and mutually, increasing unemployment rate cause economic difficulties. So, the purpose of this study is investigate effect of Improving governance on unemployment rate in G77 selected countries during the period 1996-2012, using panel data method. The results show that governance has negative and insignificant effect on unemployment rate. It shows Lack of coordination among macroeconomic policies. So, policy makers should try to improving governance and targeted recruitment of labor. Also, the results show that the variables of GDP and economic freedom have negetive and significant effect on unemployment rate. The effect of the variables of the costs of labor compensating and natural resources are negative and insignificant