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As the title states, when you choose a Ranger archetype at 3rd level and choose Beast Master to gain a companion, does the companion level up with you as you progress?

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No.

But its AC, attack rolls and damage scale with the ranger's proficiency bonus, and its HPs with ranger's level.

PHB p.93

Choose a beast that is no larger than Medium and that has a challenge rating of 1/4 or lower (appendix D presents statistics for the hawk, mastiff, and panther as examples). Add your proficiency bonus to the beast’s AC, attack rolls, and damage rolls, as well as to any saving throws and skills it is proficient in. Its hit point maximum equals its normal maximum or four times your ranger level, whichever is higher.

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    \$\begingroup\$ This is largely why the Beast Master archetype is considered a little underpowerd by many. Personally, I houserule that when the player gets an Ability Score Improvement from the Ranger class, they can apply one to the beast - which can be traded for some of the available feats (basically the ones that make sense for animals, DM's discretion) if Feats are in play. I also say that the beast companion has a d6 hit die, it has as many of them as you have levels in Ranger, and it can spend them to heal in rests the same way you can. I'm fairly sure that's enough to balance things out. \$\endgroup\$ – anaximander Jun 8 '16 at 20:12
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Sort of ...

Add your proficiency bonus to the beast’s AC, attack rolls, and damage rolls, as well as to any saving throws and skills it is proficient in. Its hit point maximum equals its normal maximum or four times your ranger level, whichever is higher.

Both your proficiency bonus and 4x your level increase as you go up so there's that.

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