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Not 100% sure but from what I've observed, first things that come to mind are SoL and unemployment if you can't build stuff fast enough to get them all employed and it also means they need food and if there isn't enough food then they starve and that will decrease your SoL which will then create radicals. Large populations also consume a lot of bureaucracy like in China. It might also have a negative effect on infrastructure too.
If you enact this in multiple states, especially in a large country, it begins to snowball fast because 500% modifier is huge. From what I've observed, the decree can grow a state's population from under 100k to 1m in like 10-20 years, so if you forget it then you will probably notice it at some point.
I usually enact this in low pop states and keep an eye on it until the pops increase to similar levels to my other states, then turn the decree off.
I'm having trouble updating the mod in the workshop but I tried it in-game and it still works fine.
Sorry it took so long, to my knowledge from testing the mod works fine in 1.7