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This paper empirically examines the formation of municipalities in the U.S. It traces change in unincorporated areas over decades to determine how basic dimensions of population heterogeneity affect the probability of a municipal incorporation. The paper also examines how state legislation on local government autonomy affect that probability of a municipal incorporation. To guide the study, I follow theory on local government boundary change and the Tiebout hypothesis--literatures interested in the role of municipal fragmentation in tax-and-service differentials within metropolitan areas. I take advantage of this opportunity to present a boundaries-normalized dataset that can be useful to other researchers. [ABSTRACT FROM AUTHOR]