I am going to go out on a very long limb and predict, contrary to Becker, that Putin's plan will fail. The major reason is that it lacks credibility. Having a child is a long-run investment, and Russians cannot be confident that the long-run features of the plan--the increased housing allowances and child-care subsidies--will be implemented throughout the childhood of the second children. Even the short-run features are uncertain. The generous upfront cash grant cannot be withdrawn from the bank until the child is three years old, which means three and three-quarter years after conception. And the paid-work-leave provision is supposed to last 27 (18 + 9) months after conception. I assume, without knowing, that the work-leave provision is to be funded by employers--and will there be any actual enforcement? If I were a Russian, I would be extremely skeptical that the plan will be fully funded and implemented, and this would make me reluctant to invest in a second child.
Moreover, a plan that costs 1 percent of GDP (that would be more than $100 billion in the United States, though it is only about $15 billion in Russia) must be financed, and depending on how it is financed, it may reduce the after-tax incomes of couples, thus offsetting, perhaps to a considerable degree, the benefits conferred by the plan. (Of course if the plan is a failure, it will not cost 1 percent of GDP, but that would just make it a cheap failure.)
Even if Becker's estimate of the effect of the Putin plan is correct--that it would raise the birthrate by 15 to 20 percent--that would still leave the birthrate far below the replacement level. So this expensive plan, even if successful (which is what would make it expensive), would merely reduce the rate of population decline. That rate is a function not only of the birthrate but also, as Becker points out, of the very poor health of the average Russian man. So if the main goal is to retard population decline, Russia might in lieu of the Putin plan allocate an additional 1 percent of its GDP to health care. Current health expenditures in Russia are only about 6 percent of GDP; a 17 percent increase (1/6) in health expenditures might have a dramatic effect on longevity. The broader point is that before Russia throws a huge amount of money (by Russian standards) at a problem, it should be careful to make sure that there are no better uses for the money.
Should Russia worry about population decline? Curiously, when population decline is heavily influenced by excess adult mortality, the decline has less effect on the dependency ratio (the ratio of nonworkers to workers) than when it results solely from a low birthrate. Japan has a very high dependency ratio because of that nation's combination of high longevity with a very low birthrate. Russia has low longevity and thus relatively few (male) retirees.
Apart from the effect on the dependency ratio, I don't think a country should worry much or maybe at all about a declining population. A declining population means less pollution and congestion and, as Becker also notes, a higher ratio of land to population--the Black Death in Europe in the Middle Ages contributed to a substantial increase in average wages as a result of the reduction in the population (by about a third--which is almost the reduction predicted for Russia by mid-century); and that wage increase, some economic historians believe, set the stage for Europe's subsequent economic takeoff. The effect in Russia would not be nearly so dramatic, however, because Russian population density is already low, although this is a little misleading because large parts of Russia are virtually uninhabitable.
Judging from the economic success of countries with very small populations, such as Switzerland, Singapore, and Denmark, the fact that a greater population increases the opportunities for specialization is not importan to a nation's prosperityt. The reason is free trade. A small country specializes in a few products and trades them for products in which other countries specialize. Put differently, given free trade, the relevant market is the whole world, and the size of the global market is not significantly affected by Russian demographic trends.