The purpose of this paper is to evaluate the efficiency of Active Labor Market Policies (ALMP) expenditures of OECD countries taking into account the institutional quality of governance. The emphasis is on the quality of governance that affects the supply and demand of employment and the ability of governments to master public spending. Using the general method of moments (GMM) for 31 OECD countries over the 2000/2020 period, we show that measures of institutional quality such as Control of Corruption, the Effectiveness of Governance and the Regulatory Quality affects significantly the efficiency of ALMP on unemployment rate. This result is found consistent using Institutional Quality Index ‘IQI’. The influence of institutional quality on the link between ALMP expenditure and unemployment rate suggest the importance for policy makers to enhance institutional quality. They consider it as a possible instrument for improvement results in labor market of OECD countries.