Yes, seam-gen will create entity relationships.
If you are not seeing any it may be that you have not created the referential relationships for the foreign keys in your tables.
Thank you. I believe you were correct about referential relationships not being set properly.
I realized that my database tables were of type MyISAM so I switched to a different MySQL server that was capable of handling tables of type InnoDB. It now appears that the relationships between the tables are being defined correctly.