Question

What will happen to the demand curve for workers in steel mills if some technology that increases their productivity is introduced assuming all else equal?

The answer is: It may cause a rightward shift in the demand curve of the workers.

I would've assumed that the demand curve for workers would shift left because the workers are producing more so the steel mill wouldn't demand more of them.

Answer 1

We have to approach the problem from Output side first.

When a technological advancement is made which increases productivity, the firm can produce more output using same number of workers, or produce same output using less number of workers. In either case, profitability increases ceteris paribus, so firms will increase production of the final output. To increase production, the firm will hire more workers, so demand for labor will increase, shifting labor demand curve rightward.