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Does increasing the wattage of LEDs increase their output?

This may occur if you are using the same product from the same brand, with the same optics and hardware. However, in general, the nature of the components (like the optical system, the heat sink, the LED chip, and the driver) affects the output more than the wattage does. A 3watt LED luminaire from one manufacturer will have a different output to a 3watt LED luminaire from another manufacturer, even if the same LED chip is used. Hence, using a high quality chip alone does not guarantee better performance. Note that as the wattage increases, the efficiency drops slightly. An LED driven at 3W will emit slightly less than three times the output of one driven at 1W.