There are many different types of cab signals with many different purposes, uses, effects, and results. If we're considering "intermittant cab signals" that pick up an indication from a wayside inducer, then:
Compared to no signaling system at all, yes, cab signals substantially increase capacity of a given line.
Compared to a single-track ABS signaling system only, with authority granted by timetable & train order, or track warrant or DTC authority, cab signals if they are implemented to grant authority, will increase capacity significantly. If they do not grant authority, then they will not.
Compared to a double-track current-of-traffic ABS signaling system, cab signals along with an ATC system might increase capacity if higher train speeds than 79 mph are employed for passenger trains, but only if the traffic mix, locations of station stops, and number of passenger trains are conducive to taking advantage of the higher than 79 mph speeds enabled. In general terms unless there is a huge number of passenger trains on the line and not very many freights, capacity won't be increased because of the overtake problem.
Compared to a wayside CTC signaling system, with authority granted by absolute signals, capacity might be increased as described above. But generally not. Large train speed heterogenity sucks up a lot of capacity. If you had a pure passenger-train railroad, an ATC system whether all-wayside, wayside/cab signal, or pure cab-signal, will increase capacity. The cab signals without an ATC system will not.
Cab signals are yesterday's technology. PTC systems are today's. But PTC systems will not significantly increase capacity, either, if there is significant train speed heterogenity. The "floating block" concept to decrease train physical separation is nice in theory but in reality is extremely difficult to leverage to increase capacity to any meaningful degree.
RWM