Abstract: Unemployment shows long persistence in China' economy. This paper considers a NK-DSGE model with skill loss and learning by working, and analysis the mechanism of unemployment persistence. The result argues that: (1)negative technology shock has much larger impact on low skill labors; (2)skill loss and learning by working changes the skill composition of unemployment and the persistence of unemployment, that is: the larger of the skill loss probability, the more persistence of unemployment; and the larger of skill upgrading, the less persistence of unemployment. Further, by skill training to alleviate the effect of skill loss and promote the effect of learning by working maybe helpful for alleviating the problem of unemployment persistence.

Key words: skill loss, learning by working, unemployment persistence