Fixed effects is a statistical method used in panel data analysis to control for unobserved variables that do not change over time. By focusing on variations within the same entity, such as individuals or companies, it helps isolate the impact of specific factors while accounting for constant characteristics. This approach is particularly useful in studies where the same subjects are observed repeatedly. In a fixed effects model, each entity has its own intercept, allowing researchers to analyze how changes in independent variables affect the dependent variable. This method is commonly applied in fields like economics and social sciences, where understanding individual behavior over time is crucial.