Final answer:
Increased worker productivity from technological advancements may lead to higher wages in the short run, but initial changes might not be immediate. As firms' profits grow due to cost savings and increased output value, market dynamics, such as competition for skilled labor, may push wages upward. Over the long run, average wage levels will tend to match productivity increases more closely.
Step-by-step explanation:
When the productivity of workers increases as a result of technological improvements, it affects the wage rate a firm is willing to pay. In the short run, the initial impact of increased productivity may not immediately lead to higher wages for workers. However, as employers recognize the value of the increased output, workers may start to see an increase in their wages. If the technology improvement leads to significant cost savings for the firm, it could result in increased profits. These profits can facilitate higher wages, but this depends on market variables and the firm's discretion.
Competitive market dynamics will come into play; other firms seeking to benefit from higher productivity may offer higher wages to attract skilled labor, setting off a trend that could generally increase wages. Some firms might opt to increase wages to retain their best workers and their heightened productivity. On the other hand, if the increase in productivity exceeds the growth in demand for the firm's product or service, it may not result in immediate wage increases since the company could handle higher output with the same or even fewer workers.
In case employers resist increasing wages despite rising productivity, they may eventually face pressure from labor unions or competitor firms who are willing to capitalize on the improved productivity through higher wages.
The long run scenario is different as wages will tend to align more closely with productivity changes due to competitive market pressures and economic equilibria.