Objective. This study explores the entrepreneurial tendencies of Mexican immigrants in metropolitan statistical areas (MSAs) on the U.S. side of the Mexican border vis-à-vis the U.S. interior.

Methods. Using 2000 Census data available in the 5% Integrated Public Use Microdata Series, we empirically analyze the self-employment rates and earnings of Mexican immigrants residing in U.S. cities near Mexico versus those in nonborder MSAs.

Results. Our findings indicate that Mexican immigrants in MSAs along the U.S.-Mexico border have significantly higher self-employment rates (but lower earnings) than their counterparts in the rest of the United States and non-Hispanic whites in border cities. Explanations for these findings include the existence of trade opportunities in U.S. border cities as well as intense labor market competition that crowds a greater share of immigrants into self-employment.

Conclusion. Immigration reform that curtails the immigration flow from Mexico might hinder small business formation and economic development on the U.S. side of the Mexican border.