Final answer:
An increase in labor productivity growth could be caused by technological progress, although this does not always lead to immediate wage increases. A historic example from the 1990s shows productivity rose without an immediate increase in wages due to prior wage expectations and labor market conditions.
Step-by-step explanation:
A reason for an increase in labor productivity growth could be technological advancements that allow workers to produce more in the same amount of time. However, looking at the historical example from the late 1990s, we see a situation where productivity unexpectedly rose and the real output per hour of labor increased significantly. Although one might expect this to lead to increased wages, this wasn't immediately the case. Instead, the demand for labor shifted out to the right, resulting in a period where wages did not rise despite increased productivity. The prevailing wage levels were still set according to prior expectations of no productivity growth, so the quantity of labor demanded exceeded the quantity of labor supplied, leading to very low unemployment rates below the natural level for a time.
It's important to consider that increased productivity does not always correlate with immediate wage increases due to various factors such as labor market dynamics, contractual wage agreements, and expectations of productivity levels.