Do rental rates on capital and land always follow each other?

When wages go up, do BOTH rental rates on capital and rental rates on land always go down?





When wages go down, do BOTH rental rates on capital and rental rates on land always go up??Do rental rates on capital and land always follow each other?
Of course not. It all depends.





One factor is relative desirability. For example, there are many rural communities in Japan (and a smaller number in the U.S.) that are completely drying up because no one wants to live there. There is no industry nearby so people migrate to the big cities where wages are higher. Higher wages resulted in lower land prices in these villages as more people left and demand for land went down.





Another factor is ';sticky'; prices. People do not evaluate real costs and benefits, but nominal costs and benefits: they object more to a 10% wage cut with no inflation than no change in nominal wages but a 10% inflation, even though both reduce the purchasing power of their income.





Some markets and prices show more stickiness than others. Real estate tends to be stickier in the downward direction than most. (Land prices rise quickly but fall very slowly.)





Then there is the time factor. Real estate has a very long time constant - it takes a long time to build new housing, offices, etc. Most (but not all) other capital can be produced much more quickly. There is no reason to expect that products with different time constants will track in price.





And there is the other time factor. Land does not degrade or become obsolete as other forms of capital tends to do.