Abstract There is strong evidence that high quality early childhood programs targeting disadvantaged groups can have lasting benefits and high returns on investment. The evidence for universal programs, however, is less conclusive. The present paper examines the claims of universal and targeted approaches to preventing early education gaps. First, recent findings on the universal unitary early education and care systems in Denmark and Norway are reviewed regarding the educational quality and compensating effects on disadvantaged children. Second, the advantages and disadvantages of targeted approaches are discussed, focusing in particular on the trade-off between cost-effectiveness and aggregated impact on society. Third, the Dutch educational equity policy will be analyzed as a case in point to illustrate the dilemmas, contradictions and paradoxes of equity policy pertaining to targeted and universal approaches. Finally, as a synthesis of the findings, two complementary approaches are outlined: a universal within targeted and a targeted within universal approach.