Modulating signal with polarization modulator (PolM) is the simplest method for polarization shift keying (PolSK) in free space optical communication. However, this method has an intrinsic drawback on degree of polarization (DOP) reduction for the existence of polarization mode dispersion (PMD) in PolM. In this work, we analyze this change of DOP and its influence on PolSK using coherency matrix. We demonstrate that the decrease of DOP after PolM will generate extra loss and bit error ratio (BER) for PolSK communication, while this loss and BER will aggravate with the increase of laser linewidth and PolM length. For a practical PolSK system, laser linewidth should be less than 0.008nm.